The churn of the global smartphone market is creating a huge market for refurbished smartphones. The cycle of users disposing of old devices for the latest version has been a reality since the launch of the smartphone, but it has taken a few years for it to create a space big enough for the refurbished device to have an impact on the smartphone market overall. Research firm Gartner recently published figures showing that the secondhand phone market will become big enough over the next couple of years to encourage providers to think about marketing to users adopting older phone models.
Gartner surveyed the U.S. and Germany and found that 60% of users in those countries are getting rid of devices simply to adopt an upgraded version. Additional functionality and slight alterations to hardware are attracting the majority of smartphone users — great news for smartphone giants who have been warned that certain markets like the U.S. are approaching smartphone saturation. But it appears as though — despite most people in those countries owning smartphones that work like new — users are still willing to jump on the latest device. This trend is creating a big secondhand smartphone market and will certainly have an impact on the supply chain of the overall smartphone market.
The research firm says that the worldwide market for refurbished phones that are sold to end users will grow to 120 million units by 2017 — up from 56 million units in 2014. That’s a wholesale revenue of around $14 billion up from 2014’s $7 billion.
Meike Escherich, principal research analyst at Gartner, commented:
This rise in smartphone reuse will impact not only the sales of new units, but also the revenue streams of all those involved in the smartphone supply chain. Stakeholders that are already participating in take-back or trade-in programs need to have a strategy for turning used devices into a positive asset. Others — particularly high-end phone original equipment manufacturers (OEMs) — need to take a closer look at this market in order to evaluate the impact these secondhand devices will have on their market positions and revenue streams.
Gartner found that about 25% of the early adopters in the U.S. are tech enthusiasts and “trend setters” who set the tone for the further adoption of certain devices as they are also primarily the customers who write reviews. The long-term impact that this secondhand market could have on the smartphone scene overall is a type of cannibalization: when high-end smartphone users are discarding their premium phones for the next version, users who would otherwise purchase a mid-range smartphone can opt for the refurbished, previously high-priced device. Mid-range smartphone makers have something new to consider.